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SEBI eases rules for buying stressed assets; here's what it means according to experts

Updated : June 24, 2020 07:41 PM IST

Market regulator SEBI has made it easier for stressed companies to raise funds, provided the promoter is willing to find a new owner.

SEBI has allowed preferential offer of shares to the new owner at the past 2-week average price and not the six month average price. Earlier, in another case, Jet Airways resolution partly fell through because of higher asking price given the formula.

Secondly, SEBI has also said that in case of takeover of a defaulting or a stressed company, open offer is not required from the new promoters. This is also a huge relief for a prospective buyer of a distressed company.

So will this help the exiting stock of NPAs or will it at least reduce the fresh rise of defaulters?

Separately, earlier this month the RBI had also issued draft rules on loan assignment, which make it easier for banks to sell loans to AIFs or alternate investment funds.

Are all these paving the way for a slightly quicker resolution of stressed loans? What about good old IBC and the NCLTs? Are those in cold storage or are slowly working to reduce the stock of NPAs? To answer all these, Latha Venkatesh spoke to S Srinivasan, MD of Kotak Investment Advisors, Sunil Mehta, CEO of the Indian Banks Association, Shardul Shroff of Shardul Amarchand Mangaldas and Abizer Diwanji of EY.

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